In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years

Several factors may have led to this major turn of events:

The ever-declining value of the U.S. dollar, rock-bottom interest rates, reduced prospects for growth (in large part from its present economic downturn), and seemingly out-of-control U.S. spending deficits. These have led many countries to question the underlying future stability of the U.S. currency – one for which they’d rather not sell their products.

China’s growing financial dominance and expanding influence in the region, where more than 10% of every Middle Eastern country’s imports originates from China. The Chinese appear to have spear-headed the move away from the greenback. Over the last decade, China became heavily invested in U.S. treasury bonds and other dollar-denominated assets – invested from its extraordinary trade surpluses. The Chinese essentially underwrote Bush’s tax cuts for the wealthy, the Iraq War, and are now funding America’s bank-bailouts, and recession-recovery spending. It would like to ween itself off this current conundrum – thereby allowing itself to diversify its dependencies on the dollar. But it must do so gradually, or risk devaluing its own U.S. dollar holdings, which currently accounts for much of its wealth (China is the world’s biggest holder of U.S. Treasuries). For this reason, the group has set a date of 2018 (nine years) to complete the transition from the U.S. dollar to a basket of other currencies.

Couple China’s new financial dominance with growing bitterness of the Arab states over US policies (Israel, Iraq, and, in particular, its power to interfere in the financial markets) and you’ve got yourself a global monetary coup d’etat. Brazil and India have also expressed interest in completing their oil deals in non-dollar denominations.

How did the current global financial system become dollar-denominated in the first place?

Ever since the Bretton Woods agreements – the accords after the Second World War which bequeathed the architecture for the modern international financial system – America’s trading partners have been left to cope with the impact of Washington’s control and, in more recent years, the hegemony of the dollar as the dominant global reserve currency.

The Chinese believe, for example, that the Americans persuaded Britain to stay out of the euro in order to prevent an earlier move away from the dollar. But Chinese banking sources say their discussions have gone too far to be blocked now. “The Russians will eventually bring in the rouble to the basket of currencies,” a prominent Hong Kong broker told The Independent. “The Brits are stuck in the middle and will come into the euro. They have no choice because they won’t be able to use the US dollar.”

Upon the very release of this news in today’s Independent, the U.S. dollar nosedived towards year lows against the Yen and the Euro.

Officials in several of the countries either denied talks or said they had no knowledge. But the denials did not stop the dollar sell-off.

Fisk reminds us that the motivation for wars most often boils down to dollars and cents (in this case, literally):

Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars. Bankers remember, of course, what happened to the last Middle East oil producer to sell its oil in euros rather than dollars. A few months after Saddam Hussein trumpeted his decision, the Americans and British invaded Iraq.

Considering the impact a global desertion of the greenback would have on the American economy and its standard of living, it certainly seems plausible.